Does R&D Always Support Sustainable Growth? Evidence from an Emerging Economy

Thuy Van Vu Thi (), Thuy Do Thi Thu and Le Dao Thi Nhat
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Thuy Van Vu Thi: National Economics University, School of of Banking and Finance
Thuy Do Thi Thu: National Economics University, School of of Banking and Finance
Le Dao Thi Nhat: Audience Serv Co. Ltd.

A chapter in Proceedings of the International Conference on Emerging Challenges: Strategic Adaptation in the World of Uncertainties (ICECH 2022), 2023, pp 360-373 from Springer

Abstract: Abstract This paper aims to investigate the relationship between sustainable growth rate (SGR) and research and development activities (RD) in an emerging economy. Along with the development of information technology and the explosion of creativity, we want to evaluate the impact of RD on the development of the business. We use panel regression techniques to examine a sample of 767 Vietnam-listed companies from 2008–2020. The empirical results show a negative impact of RD on SGR, meaning that investment in the RD of the existing business does not provide the benefit of value growth. Existing RD strategies may represent only firms’ innovation efforts. This confirms that managers need to consider and evaluate more clearly the contribution of research and development to different categories. Besides, the control variables in the model, including SIZE (the natural logarithm of total assets), ROA (returns on assets ratio), STATE (the percentage of ownership in the firm held by state), LV (Financial leverage ratio that equals total debt borrowings scaled by lagged total assets), DUALCFO (Dual CFO-COO in firm management), and CF (the ratio of total cash flow to total assets), are statistically significant. This finding has practical implications for enterprises investing in technology and policymakers to improve production and business activities’ scientific and technological capacity .

Keywords: Emerging economy; Sustainable growth; R&D (search for similar items in EconPapers)
Date: 2023
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DOI: 10.2991/978-94-6463-150-0_24

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